Assume that you are a Harvard-graduated analyst at a successful business called "Project X." You are reviewing the company’s income statement and balance sheet below. The business has been around for a couple years and is going on its fifth year with no signs of slowing down. The CEO of the firm, Sam, a successful community-college dropout, tells your that Project X is projecting estimates of 15-25% revenue growth (i.e., you can safely assume 20%) in the future given the company’s trajectory.

Revenue	$ 2,000,000.00
COGS	$ 1,000,000.00
Gross profit	$ 1,000,000.00
Other variable expenses	$ 200,000.00
Depreciation	$ 50,000.00
Other fixed expenses	$ 600,000.00
Net profit	$ 150,000.00
Cash	$ 100,000.00
A/R	$ 200,000.00
Inventory	$ 250,000.00
Capital assets	$ 250,000.00
A/P	$ 50,000.00
Other short term debt	$ 200,000.00
Long term debt	$ 150,000.00
Equity	$ 400,000.00

Sam the CEO tells you to explain how much additional financing (i.e. funding $) will Project X need to support this growth of revenue. Explain your assumptions and process to the CEO as to how you arrived at your answer (a paragraph or two write up, please). Note: The source of funding is not important, please focus your analysis on total funding needed e.g., regardless of whether it will be provide by equity or debt, including credit from suppliers.

Answer rating: 100% (QA)

To calculate the additional financing needed to support the projected 15 25 revenue growth I made se... View the full answer